Comments on Fadi Shaheen’s UTPR Characterization

Abstract

In his article (Fadi Shaheen, “Is the UTPR a 100 Percent Tax on a Deemed Distribution?” Tax Notes Int’l, Oct. 16, 2023, p. 321 ), Fadi Shaheen floats the proposition that from a U.S. tax perspective, the UTPR is the mathematical, conceptual, and legal equivalent of a 100 percent withholding tax on a deemed distribution by the UTPR entity. In this piece, I explain why Shaheen’s analysis is flawed, meaning that the payment of UTPR to the U.S. government by a U.S. subsidiary of a foreign parent can not be characterized as a distribution with respect to stock. Rather, it is simply the payment of a tax owed by the U.S. subsidiary.

Keywords: UTPR, Pillar 2, International Taxation, Pillar Two, BEPS

JEL Classification: H21, H25, K34, E62